Question 1

Regarding income distribution and the distribution of wealth

Accepted Answer

A)  wealth is a stock concept and income a flow concept. 
B)  a stock is evaluated at a given moment in time; a flow is evaluated during a period of time. 
C)  income, a flow, can be viewed as a return on wealth. 
D)  All of the above are correct. 
A)  wealth is a stock concept and income a flow concept. 
B)  a stock is evaluated at a given moment in time; a flow is evaluated during a period of time. 
C)  income, a flow, can be viewed as a return on wealth. 
D)  All of the above are correct.

Question 2

-Use the above table. What percentage of income is received by the poorest 20% of the population?

Accepted Answer

A)  20 percent 
B)  13.3 percent 
C)  11.1 percent 
D)  7.0 percent 
A)  20 percent 
B)  13.3 percent 
C)  11.1 percent 
D)  7.0 percent

Question 3

All of the following are income in kind EXCEPT

Accepted Answer

A)  government provided housing. 
B)  government provided education. 
C)  tips received by a waitress. 
D)  goods produced in the home. 
A)  government provided housing. 
B)  government provided education. 
C)  tips received by a waitress. 
D)  goods produced in the home.

Question 4

A diagonal straight line on a Lorenz curve represents

Accepted Answer

A)  a perfectly unequal distribution of income (one person has everything). 
B)  a perfectly equal distribution of income. 
C)  a high level of inequality in the distribution of income. 
D)  an oblique distribution of income. 
A)  a perfectly unequal distribution of income (one person has everything). 
B)  a perfectly equal distribution of income. 
C)  a high level of inequality in the distribution of income. 
D)  an oblique distribution of income.

Question 5

Marginal productivity theory would suggest that

Accepted Answer

A)  all workers should be paid the same wage. 
B)  higher productivity will increase the market wage of an individual. 
C)  labor demand will have no impact on the wage paid. 
D)  workers cannot do anything to improve their wage prospects for the future. 
A)  all workers should be paid the same wage. 
B)  higher productivity will increase the market wage of an individual. 
C)  labor demand will have no impact on the wage paid. 
D)  workers cannot do anything to improve their wage prospects for the future.

Question 6

Today the portion of total U.S. national income spent on health care is about

Accepted Answer

A)  7 percent. 
B)  17 percent. 
C)  34 percent. 
D)  51 percent. 
A)  7 percent. 
B)  17 percent. 
C)  34 percent. 
D)  51 percent.

Question 7

Current income maintenance programs

Accepted Answer

A)  often provide benefits to people who are working and earning substantially more than the poverty level. 
B)  reduce the incentive of recipients to work. 
C)  have safeguards to ensure that recipients work whenever physically able. 
D)  fail to make the income distribution more equal. 
A)  often provide benefits to people who are working and earning substantially more than the poverty level. 
B)  reduce the incentive of recipients to work. 
C)  have safeguards to ensure that recipients work whenever physically able. 
D)  fail to make the income distribution more equal.

Question 8

Which of the following is NOT a determinant of an individual's marginal product?

Accepted Answer

A)  talent 
B)  money income 
C)  experience 
D)  educational level 
A)  talent 
B)  money income 
C)  experience 
D)  educational level

Question 9

An individual with no deductible on his or her health insurance policy will tend to engage in a lifestyle that is less healthy than a person with a $2,000 insurance deductible. This is said to be a problem of

Accepted Answer

A)  healthy selection. 
B)  moral hazard. 
C)  wellness training. 
D)  blue-zoning. 
A)  healthy selection. 
B)  moral hazard. 
C)  wellness training. 
D)  blue-zoning.

Question 10

The top 5 percent of health care users in the United States account for

Accepted Answer

A)  30 percent of all health costs. 
B)  over 50 percent of all health costs. 
C)  over 75 percent of all health costs. 
D)  almost 90 percent of all health costs. 
A)  30 percent of all health costs. 
B)  over 50 percent of all health costs. 
C)  over 75 percent of all health costs. 
D)  almost 90 percent of all health costs.

Question 11

The age-earning cycle predicts that a typical person will

Accepted Answer

A)  be earning $50,000 in the year 2010. 
B)  be earning the lowest income right before retirement. 
C)  be earning the highest income right before retirement. 
D)  be earning the highest income at about the age 45-50. 
A)  be earning $50,000 in the year 2010. 
B)  be earning the lowest income right before retirement. 
C)  be earning the highest income right before retirement. 
D)  be earning the highest income at about the age 45-50.

Question 12

One reason earnings tend to fall before retirement age is that

Accepted Answer

A)  the experience of people is no longer valuable after they are 50 or 55. 
B)  people tend to reduce the number of hours they work after age 50. 
C)  people are retiring earlier. 
D)  firms discriminate against older workers. 
A)  the experience of people is no longer valuable after they are 50 or 55. 
B)  people tend to reduce the number of hours they work after age 50. 
C)  people are retiring earlier. 
D)  firms discriminate against older workers.

Question 13

The earnings of most people

Accepted Answer

A)  increase steadily until retirement. 
B)  increase with age until around age 50 due to increased experience, training, and hours worked. 
C)  increase with age until around age 40 due to increased experience and hours worked. 
D)  increase with age until around age 60 due to increased experience, training, and hours worked, then level off as hours worked levels off. 
A)  increase steadily until retirement. 
B)  increase with age until around age 50 due to increased experience, training, and hours worked. 
C)  increase with age until around age 40 due to increased experience and hours worked. 
D)  increase with age until around age 60 due to increased experience, training, and hours worked, then level off as hours worked levels off.

Question 14

The purpose of the Earned Income Tax Credit Program (EITC) is to

Accepted Answer

A)  provide rebates of Social Security taxes to low-income workers. 
B)  encourage low- and moderate-income workers to take second jobs to increase their income. 
C)  provide in-kind services such as food stamps and public housing to those individuals who have poor credit. 
D)  give tax credits to low-income individuals who do volunteer work in their communities. 
A)  provide rebates of Social Security taxes to low-income workers. 
B)  encourage low- and moderate-income workers to take second jobs to increase their income. 
C)  provide in-kind services such as food stamps and public housing to those individuals who have poor credit. 
D)  give tax credits to low-income individuals who do volunteer work in their communities.

Question 15

If we include cash benefits and in-kind benefits available to low-income people, the share of the U.S. population in poverty

Accepted Answer

A)  drops dramatically. 
B)  increases somewhat. 
C)  increases dramatically. 
D)  does not change. 
A)  drops dramatically. 
B)  increases somewhat. 
C)  increases dramatically. 
D)  does not change.

Question 16

Social Security is a pure transfer program because

Accepted Answer

A)  it transfers funds from current workers to the poor. 
B)  the government transfers funds from middle-income workers to welfare recipients. 
C)  current payroll taxes are used to pay the eligible retirees. 
D)  the government subsidizes the medical bill of the poor. 
A)  it transfers funds from current workers to the poor. 
B)  the government transfers funds from middle-income workers to welfare recipients. 
C)  current payroll taxes are used to pay the eligible retirees. 
D)  the government subsidizes the medical bill of the poor.

Question 17

-The above figure supports all of the following statements regarding health care EXCEPT

Accepted Answer

A)  the demand for health care is insensitive to price changes; as the price goes up, so does the quantity demanded. 
B)  if all medical expenses were paid for by third parties, the quantity demanded would increase tremendously. 
C)  due to third party payments, patients demand a higher quantity of health care services per year. 
D)  the lower the deductible, the greater is the quantity demanded of health care services per year. 
A)  the demand for health care is insensitive to price changes; as the price goes up, so does the quantity demanded. 
B)  if all medical expenses were paid for by third parties, the quantity demanded would increase tremendously. 
C)  due to third party payments, patients demand a higher quantity of health care services per year. 
D)  the lower the deductible, the greater is the quantity demanded of health care services per year.

Question 18

Typically, the major cost of a college education is

Accepted Answer

A)  tuition. 
B)  books. 
C)  foregone income. 
D)  housing. 
A)  tuition. 
B)  books. 
C)  foregone income. 
D)  housing.

Question 19

The effects of the national health care program on goods and services markets will

Accepted Answer

A)  increase the marginal cost of the firm. 
B)  increase the quantity produced of the firm. 
C)  consumers will pay lower prices for many goods and services. 
D)  decrease the quantity demanded for all goods and services. 
A)  increase the marginal cost of the firm. 
B)  increase the quantity produced of the firm. 
C)  consumers will pay lower prices for many goods and services. 
D)  decrease the quantity demanded for all goods and services.

Question 20

The typical age-earnings cycle shows that

Accepted Answer

A)  there is a positive relationship between age and earnings that eventually turns into a negative relationship. 
B)  there is a negative relationship between age and earnings that eventually turns into a positive relationship. 
C)  there is a constant negative relationship between age and earnings. 
D)  there is no relationship between age and earnings. 
A)  there is a positive relationship between age and earnings that eventually turns into a negative relationship. 
B)  there is a negative relationship between age and earnings that eventually turns into a positive relationship. 
C)  there is a constant negative relationship between age and earnings. 
D)  there is no relationship between age and earnings.

Exam 30: Income, Poverty, and Health Care

Regarding income distribution and the distribution of wealth

-Use the above table. What percentage of income is received by the poorest 20% of the population?

All of the following are income in kind EXCEPT

A diagonal straight line on a Lorenz curve represents

Marginal productivity theory would suggest that

Today the portion of total U.S. national income spent on health care is about

Current income maintenance programs

Which of the following is NOT a determinant of an individual's marginal product?

An individual with no deductible on his or her health insurance policy will tend to engage in a lifestyle that is less healthy than a person with a $2,000 insurance deductible. This is said to be a problem of

The top 5 percent of health care users in the United States account for

The age-earning cycle predicts that a typical person will

One reason earnings tend to fall before retirement age is that

The earnings of most people

The purpose of the Earned Income Tax Credit Program (EITC) is to

If we include cash benefits and in-kind benefits available to low-income people, the share of the U.S. population in poverty

Social Security is a pure transfer program because

-The above figure supports all of the following statements regarding health care EXCEPT

Typically, the major cost of a college education is

The effects of the national health care program on goods and services markets will

The typical age-earnings cycle shows that

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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